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Cholamandalam Sec
V-Guard (Outperformer)
CMP: ₹170.15
Target: ₹188
V-Guard Industries (VGIL) was started in 1977 by Kochouseph Chittilappily to manufacture and market Voltage Stabilizers under the brand name V-Guard. VGIL emerged as a leading player in the stabilizer segment and became a household brand.
Management is focused in expanding distributor network and also to improve the revenue per distributor by adding more retailers under existing distributor and increasing the product penetration amongst the existing distributor network. Management plans to increase the retailers count to 60,000 from 25,000 over the next few years with incremental addition would be largely in the non-south market.
We are positive on the long-term outlook of the company, given its market leadership position in stabilisers, strong financial track record, strong levers for margin expansion and quest to become a pan-India player. We expect the company’s revenue and PAT to grow at a CAGR of 14 per cent and 26 per cent respectively between
FY16-19E.
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